Construction Law/rise and fall

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Question
QUESTION: if the contract specifies the following;
rate of fuel consumption, a = 2 litres/hr
base fuel price, Fo = $10/litre
current fuel price, Fn = $15/litre
In a period where P = 100 hours have been worked, what would be the appropriate rise and fall formula to use? would the following formula be sensible to use;
Rise & Fall = P * a * Fn/Fo

ANSWER: Dear Nadal,

Your proposal might be acceptable, but it all depends on the specific requirements of the Contract.

---------- FOLLOW-UP ----------

QUESTION: Thanks for the previous answer, just a follow up question;

would a formula of rise and fall = P * a * (Fn-Fo) be acceptable as well, considering that "a" ; rate of fuel consumption, would not be the actual consumption rate but the agreed consumption rate at the time of tender?

ANSWER: Dear Nadal,

It is highly unlikely that this proposal would be acceptable.

---------- FOLLOW-UP ----------

QUESTION: That's interesting, is it possible to give any motivation why with the latter formula it will be highly unlikely  that it would be acceptable.

Answer
Dear Nadal,

It all depends on how you apply the formula and you are not giving me sufficient information.  Your two formulae can be used as follows:-

1. Total change in cost per month = Hours worked per month x fuel used/hour (a) x (current cost (Fn) - base cost (Fo))

Total payment per month = Hours worked per month x fuel used/hour (a) x (current cost (Fn) - base cost (Fo)) + Hours worked per month x fuel used/hour (a) x base cost (Fo)

Total payment per month = Hours worked per month x fuel used/hour (a) x current cost (Fn)

alternatively

2. Factor to be applied to costs (F) = [(current cost (Fn) - base cost (Fo))/(base cost (Fo))]  

Total payment per month = Hours worked per month x fuel used/hour (a) x (1+F)

Total payment per month = Hours worked per month x fuel used/hour (a) x (Fn/Fo)

There is a significant difference between 1 & 2, so how would you define payment formula?

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Peter M. Elliott

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First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol www.eotprotocol.com before submitting a question.

Experience

Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

Organizations
Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

Education/Credentials
B Sc(Hons) in Civil Engineering

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